Do you face continued denial of loan approvals even when your credit score is high? A high credit score makes loan applications simple. But sometimes, when applying for loans, even those with excellent credit scores may be turned down. When approving applications for credit cards and personal loans, banks and NBFCs view a credit score of 750 or higher as good.

In this article, we will explain how having a good credit score is not sufficient to get a loan. There are several reasons for that, look at some of these:

1- Having many loans

When borrowers have too many loans in their names, banks and non-banking financial companies (NBFCs) are reluctant to give them more. Lenders are concerned that lending money to such a borrower may raise their credit risk and perhaps result in defaults. Your CIBIL score and credit information report are also impacted by frequent borrowing. 

2- Defaulters list

The names, ages, addresses, current jobs, and other information of people who have fallen behind on their payments are kept on record by banks and other financial organisations. Before the bank even looks at your CIBIL rating, you will be refused a loan if the information you have provided matches that of a defaulter, even if that matches by accident.

3- Guarantor to an already defaulted loan

The credit histories of the borrower and the guarantor are affected due to a loan failure. Your CIBIL credit report is impacted if you are a party to a loan that has defaulted, even if you are only a guarantor.

4- Remarks in the Credit Report

Any negative information in your credit record, such late payments or collections, can discourage lenders from accepting your loan application, even if you have a decent credit score.

5- Inadequate tax-paying history 

Insufficient history of paying taxes applications from people who have been actively filing income taxes for at least two years prior to the application are typically preferred by banks. Since they have a record other than CIBIL that can steer them in the right way, it is simpler to assess their creditworthiness.